Robots Don't Get Sick or Get Paid Overtime, but Are They a Profitable Option for Milking Cows?

Jeffrey Hyde, James W. Dunn, Annette Steward and Ellen R. Hollabaugh

Review of Agricultural Economics, 2007, vol. 29, issue 2, pages 366-380

Abstract: Mason Dixon Farms, a dairy known worldwide for its adoption and innovation of new technologies, is considering the purchase of forty robotic milking units to service its 2,000 cow herd. The purchase requires a $6 million investment plus any additional buildings and equipment necessary. Their alternative is a $1 million carousel milking parlor. This case asks students to assess Mason Dixon's decision by performing a capital budgeting analysis. One of Mason Dixon Farms' explicit objectives is to reduce its use of milking laborers. The results allow students to draw conclusions about the value of reducing labor management under this scenario. Copyright 2007 American Agricultural Economics Association

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